Michael J. Rosen

Michael J. Rosen is President of ML Innovations, Inc., a fundraising and marketing consulting firm serving nonprofit organizations and the companies that assist them. An AFP Certified Master Trainer and winner of the prestigious AFP/Skystone Prize for Research, Michael is the author of the bestselling book "Donor-Centered Planned Gift Marketing."

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Survey Sounds Alarm Bell for Nonprofit Sector

Over 91 percent of businesses believe they are equally or better equipped than nonprofit organizations to deliver social change, according to a recent survey reported on by Chloe Stothart of Third Sector Online.

That means just nine percent of respondents thought it was somewhat more or much more effective for businesses to donate to charity to achieve social change!

What makes these statistics even more shocking is that all of the 142 survey respondents were businesses with a Corporate Social Responsibility budget. Imagine what the statistics might look like if a more representative sample of the business community were surveyed.

While the survey was conducted in the United Kingdom by YouGovStone for the Social Investment Consultancy, it should strike fear into the hearts of all nonprofit organizations worldwide.

In the United States, corporate giving in 2010 totaled $15.29 billion, five percent of all giving, according to Giving USA 2011. While a comparatively small slice of the overall giving pie, corporate giving is nevertheless significant. And, for some nonprofit organizations, corporate giving plays an even greater role.

Here’s why the nonprofit sector should be alarmed by the survey findings:

There’s no such thing as “corporate philanthropy.” For a detailed explanation of what I mean by this, read my blog post on the subject. In short, corporations exist to enhance shareholder value, not to engage in purely philanthropic activities. That doesn’t mean businesses don’t give away money. It just means that when a business does give money, it is looking to enhance the company’s value for its shareholders. So, when businesses talk about engaging in efforts for “social change,” they are talking about efforts that will benefit the business and not necessarily society in general. Also, the business community may be overestimating its ability to facilitate social change while underestimating the ability of the charity sector.

The survey results reveal an underlying mistrust of the nonprofit sector. The business community seems to have the attitude, “If you want something done right, do it yourself.” As long as this lack of confidence in the nonprofit sector exists, we can expect corporate giving will not realize its full potential. All donors, whether corporate, individual or foundation, want to know that their funds will be wisely and efficiently used.

Jake Hayman, chief executive of the Social Investment Consultancy, believes the survey is reflective of the attitudes held by the broader corporate community. He said that businesses were becoming far more interested in doing good through their own efforts rather than by donating to charity. Hayman says,

There’s been an evolution from wanting to sponsor or outsource the good you do to wanting to run it yourself based on your strengths”

Some might attempt to dismiss this survey based on the methodology or cultural differences. There were only 142 respondents. All the respondents were from the UK. The terms (i.e.: social change) were not defined. However, I think the survey still has at least some merit regardless of any issues concerning methodology or culture. It should still serve as a warning to the nonprofit sector.

Here are five things nonprofit organizations should do now to strengthen their corporate giving efforts:

1. Match the corporation’s area of giving interest with your organization’s needs. More often than not, you will be unable to merely persuade a corporation to give to your organization. Instead, you can inspire them to give when you can identify a corporation’s areas of interest and find a match with your organization’s needs.

2. Demonstrate how giving to your organization can enhance shareholder value. Like it or not, most businesses give with an eye toward generating goodwill that will lead to more business, attracting more employees, attracting more talented staff, retaining employees, etc. If you can show how giving to your organization will benefit the business, you’ll be more likely to get money from the business.

3. Make sure prospective donors understand how efficient and effective your organization is. Do not assume that just because you represent a charity with a worthy mission, people will assume that your organization is virtuous. You need to constantly demonstrate that your organization is effectively fulfilling its mission, and that it is doing so in an efficient manner. Prospective donors — corporate, foundation, and individual — require proof that your organization is effective and efficient.

4. Make sure prospective donors understand your organization’s value-add. You need to be able to answer this question, even if it’s never verbalized by a corporate funding prospect: Why should we give to your organization rather than simply do the good works our self? In other words, why should a business out-source good works? You need to demonstrate why your organization is better suited to leverage the corporate dollars for good than the corporation itself is.

5. Explore opportunities for involving corporate funders. Through the survey, the business community seems to be expressing a desire to be more hands-on. It’s not all that different from what we increasingly hear from younger individual donors. So, when working with a corporate prospect, determine if the business has an interest in being more engaged than simply being a check-writer. Perhaps the CEO can speak at one of your charity events. Or, perhaps the company’s employees can be engaged as volunteers with one of your organization’s projects. At the very least, keep funders informed about your efforts so they can really understand the major work involved and will appreciate how efficient and effective your organization is.

As a whole, through its professional associations, the nonprofit sector needs to promote its value. One of the advantages that charities have over corporations when it comes to social change is that they often will make more of an effort to build community consensus around what is best for society. By contrast, a business will look at what is best for the business which may or may not be beneficial for society in general.

In addition, nonprofit organizations can often bring more resources to a project than a single business can. By generating support from corporations, foundations, and individuals, nonprofit organizations can access the resources to implement and sustain worthy projects.

Business and nonprofit partnerships have done much good for society. Unfortunately, as the survey report reveals, the business community is not particularly satisfied with its relationship with the charity sector. As a sector, we can ignore the warning. Or, individually and collectively, we can take action.

Before I sign-off, I want to thank fellow fundraiser Patrick Manion for bringing the Third Sector article to my attention. You can Follow Patrick on Twitter @SKEROYALWEDDING. You can Follow Third Sector on Twitter @ThirdSector.

Heather, thank you for being the first to comment. You’re quite right, “We have much work to do!” The good news is that we have the power to take the actions that will make a positive difference for our organizations.

I think CSR has brought too many businesses on the inside of non-profits. Our sector is going through immense changes and we are SLOW to respond, They are getting a ‘snapshot’, not the whole story. We evolve, as do they, but what is slowing our process is the huge change from government funding to individual. Many non-profit leaders are not seeing or managing this change well, so the corps see an opportunity. It’s false because ‘doing good’, as mentioned, is not the goal of present day corporations and their old style of ‘money first’ is sliding away as well. The next decade is going to be something!

Tina, thank you for commenting. Change is definitely in the wind. Fortunately, corporations can do good AND earn profit. Doing good can even help build a corporation’s profit. The challenge is to do so smartly. The challenge for nonprofit organizations is to be and to prove they are solid partners. You’re quite correct, the next decade will certainly be interesting.